Finance: Research, Policy and Anecdotes

Brexit - what a week!

What a week! The week when Theresa May declared that no deal is better than a bad deal, just not on 29 March 2019, allowed her party members to vote in favour of taking no deal off the table for 29 March, but then changed course and told them that no
deal is still supposed to be a viable option (just not at the end of this month), just to be defied by large numbers of her own party (including government ministers). Confused? No worries, this soap opera has a rather sophisticated plot.

The week where we finally found out who will be thrown under the train in the case of a no-deal Brexit (b/c in this populist soap operate someone has to “die” after all) – the Northern Irish farmers. The week where we found
out how a no-deal Brexit will solve the Brexit Trilemma – by giving up on all red lines ever drawn by Theresa May. Eventually, border controls will be necessary
between Northern Ireland and the Republic of Ireland; given differential tariff regimes between the Irish border and all other UK borders, controls have to be imposed in the Irish Channel and the new tariff regime will undermine UK’s ability to get any
new free trade deals (complete loss of trustworthiness being the top reason). A very odd way of taking back control!

The week where the government got finally downgraded to the status of caretaker government as it has lost its majority
in parliament. The week where the leader of the opposition finally looked more prime ministerial than the prime minister (never thought I would write this about Jeremy Corbyn). The week where we are closer to the season finale, but still have no clue how this
season will end (just that there are many more seasons to come).

As in any good soap opera, there was lots of excitement and “action”, but little substantive change in the underlying plot and no sign of resolution. Theresa
May is still trying to push through her deal and her chances might have actually increased as the alternatives have been reduced. The playing field has tilted even more against the UK as the EU has to agree unanimously to extend Article 50. If there
will be any more negotiations in Brussels it will be no longer about backstops but about the terms of extension.

In case you cannot wait until the next week’s episode, I can promise you replays over the weekend. Well informed
sources have told me that Brexiteers will insist that no deal should still be part of the British negotiating position (even though there is no one left to negotiate with – Brussels has made that clear). There are also rumours that Brexiteers might have
identified yet another obscure GATT or WTO article they can mis-interpret in their favour. And we will hear yet again, ad nauseam, to “just get on with it…” – Brexiteers have promised that the moon is made of cheese, so we have
to get on with it….